Gelf Magazine - Looking over the overlooked


November 10, 2009

The Author as Entrepreneur

With the traditional publishing model for mid-tier authors in crisis, Adam Penenberg took the promotion for his book into his own hands.

Adam L. Penenberg

In promoting his new book, Viral Loop: From Facebook to Twitter, How Today's Smartest Businesses Grow Themselves, Adam Penenberg has tried some unorthodox methods. In addition to guest-editing Publishers Weekly and commissioning a Facebook app, he's even chronicling the experience of pushing the book for Fast Company, in one of the most meta-marketing strategies we've come across.

An old friend of Gelf's, Penenberg has been on both sides of the Q&A many times, as a journalist and an author. So in advance of his appearance at Thursday night's Media Circus, we let the Viral Loop author and NYU journalism professor interview himself. (Though we did edit the interview slightly for clarity.)

Adam Penenberg
"The clickable ad unit has to die, because we have predicated an entire industry on something nobody does: Click on ads."

Adam Penenberg

Q: What is a viral loop?

A: A viral loop is a virtuous circle. You attain one by incorporating virality into the functionality or the marketing of a product. A company grows because each new user begets more users. Just by using a product, users spread it. After all, what's the sense of being on Twitter if no one is around to read your pithy observations about the Yankees? Some of the most famous businesses of our time—Facebook, MySpace, eBay, PayPal, Skype, Twitter, and app makers like Zynga—are viral-loop companies. They each created something people really want, so much so that their customers spread their product for them in much the same way you might forward the link to a YouTube video you like to all your friends. That's one of the great things about today's web: You can grow a business like you never could before and achieve almost cosmic valuations in record time. And when a company is fortunate enough to achieve a viral loop, it keeps on growing even if it does nothing.

Q. What are some prominent viral loops?

A: Viral loops have popped up in unexpected places. Barack Obama's presidential campaign was characterized by a viral loop. His supporters spread his messages for him and raised obscene amounts of money—about half a billion dollars online. Tupperware, the plastic-food-storage maker, unleashed a viral loop through its home-party plans. Each party would be attended by perhaps 20 people, most of whom would buy Tupperware. Out of these 20 attendees, perhaps two or three would also throw their own Tupperware parties and invite their own social networks of friends, relatives, and neighbors. Today Tupperware is a $2-billion business worldwide, and somewhere in the world, in the time it takes to read this sentence, another Tupperware party takes place somewhere.

Q: Can a book go viral?

A: Books that sell well are viral by their very nature, spread by word of mouth, which is a foundational type of virality. These days it's rare for someone to buy a book because she read a review. Fewer places review books, anyway. Instead, we buy books because friends, classmates, colleagues, and relatives recommend them to us. We trust their tastes and opinions and are far more apt to buy a book they are enthusiastic about. In essence, book marketing is really just another social-media node. Publishers know this, of course, although they don't use this terminology. The trick is to tap into this social dynamic, and that, of course, is not easy.

Q: But you've been trying…

A: Yes. But it's hard out there for a book pimp, to paraphrase a song from a movie. The first thing I did when I got the book deal for Viral Loop was to retain Studioe9, a web-design firm in NY, to help me create an entire social-media marketing plan. I earmarked a healthy percentage of the advance to pay for it. Book publishing is hobbled by a Catch-22. Publishers won't market a book, even one they paid a lot of money for, unless it sells really well. But it's extremely difficult to sell books without strong marketing support, especially if you are not a household name. Books by Andre Agassiand Sarah Palin are virtually assured to be bestsellers. A book by Adam Penenberg is not. It's not realistic for me to think that the day my book is published it will fly off bookstore shelves. So I took a long-term approach.

Q: And how did you do that?

A: From the beginning I believed it wouldn't be enough to write about the concept of viral loops. I had to create a proof of concept, to actually create a viral business in conjunction with the book. This is where the Viral Loop Facebook Application comes in (available at It will tell you how much you are worth—in dollars—to Facebook, based on your level of engagement, the number of friends you have and their level of activity, and your influence—which is defined, in part, by how well you spread the widget to others. The idea behind it is this: Users have value. Facebook wouldn't be worth $6.5 billion, the value that its most recent investors gave it, if it had three million users instead of 300 million. But how much are we worth, all this sharing of content that we create—newsfeed updates, chat, messages, photos, videos, the games we play? We tell you.

Q: Has the app taken off?

A: So far, the Viral Loop Facebook app has spread to thousands of users. It not only tells you what you are worth, it will also tell you what your friends are worth—as long as they download the app. When they do, your value goes up, since it pumps up the "influence" part of the equation.

Q: How does this help you sell books?

A: Inside the app there's information on the book and a clickable link to Amazon. Thus far, we have found that 13% of users who click on the Buy the Book button end up buying a book. That's a very high conversion rate. The app has spread slowly, which leads us to Phase Two of our plan. We are talking to several companies, networks, and even a charity about letting users redeem their Viral Loop values for real products and services. For example, I am worth $114 to Facebook. What would happen if I could actually spend that virtual currency on music or airline miles or clothes or discounts on rental cars, or to buy a quilt? I could even use it to donate to charity. Don't scoff. The virtual-goods market is a $1-billion industry in the US and bigger in Asia. Eventually we plan to expand it to other social platforms. If successful, it might even be possible to create an alternative economy that straddles the real and virtual worlds.

Q: In essence you are trying to create a viral loop to market a book about viral loops. Are there dangers to a journalist acting as an entrepreneur?

A: The media world is crashing in all around us. The old rules simply don't apply. Two or three years ago I pitched an idea to several magazines. I said I believed we were in the midst of an online-ad bubble that would eventually self-combust. The clickable ad unit has to die, I argued, because we have predicated an entire industry on something nobody does: Click on ads. I'd ask editors, "Do you know a single person who clicks on them? Do you yourself click on them?" But no one would publish it. I never heard a convincing reason why not, other than to tell me they thought it was farfetched to think that everyone was getting it wrong.
Now the ad depression is hobbling journalism. Ironically book publishers are better situated to withstand the pressures of online better than newspapers and magazines, because they still charge full freight for their products and aren't dependent on advertising. We are living through a Darwinian challenge. You either adapt or die. I'm trying to adapt. This coming spring I'm even teaching a new journalism grad course at NYU called "Entrepreneurial Journalism." Students will have to research and write a business plan for a media business for their capstone, and they'll pitch their ideas to a panel made up of entrepreneurs and venture capitalists. They'll also learn ways to survive as a freelance writer or blogger, and how to pitch books to agents. We're trying to offer our students real-world education. I can't think of a better contribution I could make as a journalism professor. The only danger, as I see it, is failing.

Adam L. Penenberg

Adam L. Penenberg is a journalism professor and assistant director of the business and economic program at New York University.

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Article by Adam L. Penenberg

Adam L. Penenberg is a journalism professor and assistant director of the business and economic program at New York University.

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